Customer Service; D. Bandow

This attitude naturally leads to much con cern, particularly among the' 'good govern ment" crowd, for government efficiency. Never mind whether government should be doing onejob or another-it should be doing it effectively. Indeed, there is nothing so irritating to the process-minded than someone attempting to put substance before "good" govern ment. Consider the inside-the-Beltway gang's opposition to tax cuts. Some critics are forthright: the money would be better spent on social programs or used to shrink the deficit. Others, however, worry that reducing taxes would, horrors!, burden the IRS and create more paperwork/or taxpay ers. "People will hate the Internal Revenue Service when it's Congress's fault," said Cynthia Beerbower, Deputy Assistant Sec retary of the Treasury for Tax Policy. "Peo ple are going to just freak out." For instance, the IRS figured that the proposed cuts in the capital gains tax would add seven lines to Schedule D. A 33-line Schedule W would be necessary for a credit to reduce the marriage penalty. Medical savings accounts would require a two-page form, And so on.

The contention that taxpayers would pre fer not to have an option of filling in a few extra lines in order to keep more of their own money is dubious enough. In any case, there is something, well, curious, about IRS offi cials professing their concern about tax payer paperwork. Especially since the IRS spent months preparing to carry out more Mr. Bandow is a Senior Fellow at the Cato Institute and the author o/The Politics of Envy: Statism as Theology (Transaction). by Doug Handow than 150,000excruciatingly painful audits as part of the Taxpayer Compliance Measure ment Program. The TCMP requires that taxpayers prove every line on their re turn-by producing a marriage license for their spouse and birth certificates for their kids, for instance. Preparing for such audits, last conducted in 1988, can take days. Nat urally, taxpayers, who are targeted at ran dom and not for cause, aren't compensated for their time. The psychic pain is even worse. One doctor calls the process "an autopsy without the benefit of dying." Last year the agency put the TCMP on hold, but only because of budget cutbacks, not con cern over taxpayer burdens.

Yet the IRS seems to genuinely view itself as an organization of, by, and for the tax payers. For instance, Commissioner Mar garet Milner Richardson cheerily an nounced that "The Internal Revenue Service has embarked on several major initiatives that will improve our service to you, the American taxpayer." We all like to be served, but exactly how does the IRS "serve" us? By taking our money to pay the bills run up by politicians in Washington. The IRS unabashedly seeks to instill fear in people across the land, lest someone think for even one minute that his money would be better spent by him than the government. If anyone has the temerity to act on that belief, the IRS will cajole, threaten, and penalize. This is "service"? Well, yes, according to Ms. Richardson. "The National Performance Review [NPR], chartered by the President and led by the 31 32 THE FREEMAN • JANUARY 1996 Vice President, conducted an extensive re view of the Federal government. Its purpose is to ensure a government that works for people." Which people? The customers, explained Commissioner Richardson.

The customers!? Yes, indeed. According to the Commissioner: "The NPR recog nized the Internal Revenue Service as a leader among government agencies in cus tomer service, but challenged the IRS to make even more progress toward customer service, with emphasis on quality, fairness, and efficiency. Improving customer service is central to the job of reinventing govern ment to make it work better and cost less. " Happily, the "IRS accepted the NPR's challenge. Our plans for customer service are a major step toward making better IRS customer service a reality. " Normally no one could complain about a business that tried to make customer service its most important attribute. But the term "customer" implies voluntariness. A Wal Mart customer shops there of his or her own accord. No one files with the IRS because he wants to. Taxpayers are "cus tomers" of the IRS like convicts are "cus tomers" of prisons.

Nevertheless, Ms. Richardson empha sized that she was serious. "I want you to know that the'S' in IRS represents a com mitment to serve you. We intend to meet your needs and expectations as taxpayers and as customers. If the service you receive from the IRS does not measure up to our Customer Service Standards, please let us know." Well, sure. Taxpayers-er, cus tomers-have no reason to complain so long as IRS agents-er, sales associates smile as they seize one-third and more of people's earnings. And as long as auditors er, fiscalengineers-are efficient,customers shouldn't fuss. Perhaps what is most amazing about the Commissioner's sentiments is that they seem genuine. As such, they help demon strate why the gulf separating Washington from the rest of America is so wide. Another bureau that has enthusiastically embraced Vice President Gore's NPR ini tiative is the Agency for International De velopment. AID officialsproclaim that their bureaucracy has been reinvented and are now fighting a scorched-earth campaign to defeat attempts to .either eliminate their agency or cut back the so-called foreign aid programs which they administer. At some level, of course, it is better for taxpayers that AID not lose a lot of money through administrative waste, corruption at home and abroad, and so on. However, far more fundamental than AID's efficiency or "ser vice" level is whether its programs make sense. Which is precisely the issue agency officialsprefer not to discuss.

Enthusiasm for process over substance affticts more than just incumbent public officials. Commissions (National Commis sion on the Public Service), academic insti tutions (Harvard's John F. Kennedy School of Government), foundations (Carnegie), and other groups (Center for Excellence in Government) have all arisen from time to time to argue, in the words of the Center's Mark Abramson, that "whatever govern ment does, it should do well." Most recent in this long line of "efficiency tiber alles" is Action, Not Gridlock!, which surfaced in Washington in 1994 to issue a slew of press releases denouncing government grid lock, particularly the Senate filibuster and its role in blocking a vote on healthcare reform. "Together we represent a wide variety of political views, but we share a common belief in democracy and in its most central principle-the principle of majority rule," explained former Senator Barry Goldwater, a member of Action, Not Grid lock!

But majority rule puts process before the far more important substance. Even if a majority of people want to nationalize the medical system, they have no right to do so. Nothing in the Constitution gives govern ment the authority to dictate how 250million Americans will receive health care. And for Washington to attempt to do so would be sheer madness. It has long been said that the rich are different than everyone else. So are mem bers of the Washington elite. They really believe that the government equals the peo ple. Which is reason enough for average people to keep a close eye on elected offi cials, appointed bureaucrats, and most ev eryone else in Washington. D The Foundation for Economic Education Irvington-on-Hudson, New York 10533 Tel. (914) 591-7230 Fax (914) 591-8910 E-mail: freeman@westnet.com January1996 Ruinous Litigation I n Glendale, California, a couple recent ly filed a malpractice suit against a church, alleging that incompetent pas toral counseling had led to a suicide. The case was dismissed in the end because the ministers had taken no money for their counseling. But it also suggested that church-sponsored counselors who charge fees may become the targets of such suits.

In the future they will need malpractice insurance. Everyone, it seems, is suing. Workers are bringing suits against employers, cus tomers against businessmen, tenants against landlords, clients against archi tects, engineers, and attorneys, patients against their doctors, students against their teachers. In just six years federal product liability suits alone have more than dou bled, now exceeding 10,000 every year. Last year, even the weather bureau was sued for having failed to predict a storm. The American insurance industry is suf fering the worst losses since 1906, the year of the San Francisco earthquake and fire. In reaction, it is becoming highly selective in deciding whom and what it will cover. Moreover, it is raising its rates to unprece dented levels that are jarring all other industries. Many business firms, along with individuals, professional partnerships and government agencies, are suffering an insurance crisis. Property, casualty, and liability policies are outrageously expen sive or are simply unavailable. Even Lloyds of London, having suffered staggering losses on its business dealings with American clients, is reluctant to deal any more with American insurers.

Huge malpractice suits and staggering insurance premiums are threatening health care. The industry now pays over $2 bil lion in malpractice insurance, which visi bly contributes to the high cost of medical care. One in every five doctors was sued last year, and can expect to be sued this year. The average award, according to Jury Verdict Research of Solon, Ohio, climbed to $840,396. Consequently, doc tors practice "defensive medicine," spend ing some $15 billion to $30 billion on lab tests and x-rays that are unneeded but deemed necessary for possible malpractice suits. The rampant increase in insurance costs is changing the tenor of the medical pro fession. Rather than pay higher and high er insurance bills, some physicians are lim iting their practice to relatively safe fields, like general practice or dermatology. Some are retiring early, others are aban doning their specialty altogether. Some are moving from high-risk areas to areas affected less by the litigation mania~ Some 25 percent of urban obstetricians have left the city or stopped practicing their profes sion, another 25 percent plan to stop soon.

The effects are obvious: health care in high-risk areas is declining significantly and patients' healthcare costs are rising rapidly. The quality of health care is declining in reaction to inordinate cost.

It is futile to search for a scapegoat for this liability and insurance dilemma. It is fruitless to blame patients for turning into "adversaries" eager to sue. The people are not out "to get" their doctors. It is absurd to make lawyers the favorite scapegoats, to deride them as opportunistic parasites preying on the fears of patients and pock eting the lion's share of the awards. Attorneys are no worse than their clients without whom they have no case. Similarly, it is foolish to conclude that every doctor is careless and incompetent. To search for an explanation of the mal practice insurance crisis is to seek for changes in social mores and economic doc trines that distinguish contemporary Americans from their forebears. Under the influence of liberal political thought, Americans now live by political power and economic entitlement. They are convinced that political power reigns supreme in human affairs, that govern ment as agency of this power can create income and wealth, provide knowledge and education, and care for the sick and dying. Most Americans now hold to a phi losophy of economic entitlement that makes government the arbiter, regulator, and provider of last resort. In the field of health care, the entitlement doctrine has given rise to "legal medicine" that is char acterized by government responsibility in medical matters, by federal and state rules and regulations, and employer obligations and patients' rights. Legal medicine with its myriad of rules and regulations about entitlement affords countless opportunities for litigation.

Most Americans have come to think that they are morally entitled to transfer benefits just because they are Americans. They believe in "human rights," which they interpret to mean political entitle ments created by Congressional vote and defined by bureaucratic edict. They advo cate political rights that take income and wealth from some people and give them to others; they call this the supremacy of "human rights" over "property rights," which in reality means the supremacy of political might over human right. The entitlement ideology is a transfer and redistribution ideology that is relent lessly pressing its case in the halls of pol itics and the courts of law. It is con frontational in design and intent, seeking to benefit some people at the expense of others. Entitlement battles never end; they rage in every election and every ses sion of Congress. They are heard in every court of law that is called upon to referee the entitlements.

A society that elevates economic entitle ment to its guiding maxim not only breeds social conflict, but also fosters confronta tional mores that permeate all walks of life. The confrontation is rather virulent and painful wherever the claims of beneficia ries clash with the complaints of the vic tims. It is loudest in service industries catering to millions of beneficiaries jeal ously guarding their rights. After all, enti tlements springing from conflict and breeding conflict create classes of victims as well as victors. They give free rein to distrust and suspicion and openly invite litigation between the classes. The malpractice crisis that is touching the quick of the professions and the prod uct-liability crisis that is crippling several industries reveal a moral crisis that is putting all free societies in jeopardy. They manifest a disease which, in the end, is likely to give rise to a political and eco nomic command system. For the present, they offer a panoramic view of things to come, of federal and state legislation and regulation, patients' rights and doctors' duties, of demagogic politics and ruinous litigation.

Hans F. Sennholz 1996 Summer Seminars At FEE F or the 34th consecutive summer, FEE will conduct its noted seminars in the freedom philosophy and the eco nomics of a free society. Here, in the com pany of like-minded individuals, with experienced discussion leaders, and in a setting ideal for the calm exchange of ideas, is an opportunity for those who believe that the proper approach to economic problems is through the study of individual human action. These seminars continue to attract individuals from all walks of life who seek a better under standing of the principles of a free society and are interested in exploring ways of presenting the case more convincingly. Each seminar will consist of 40 hours of classroom lectures and discussions in economics and government. In addition to the regu lar FEE staff, there will be a number of distinguished visiting lec turers. The FEE charge for a seminar-tuition, supplies, room and boardis $400. A limited number of fellowships are available. We especially encourage the application of high school and college teachers or administrators, but all are invited.

Individuals, companies, and foundations interested in furthering this educational enterprise are invited to sponsor students and assist with the financing of the fellowship program. The formal announcement giving details of the seminars will be sent immediately on request. First Session: July 14-19, 1996 Second Session: August 11-16, 1996 Write: Seminars, The Foundation for Economic Education, 30 South Broadwa)T,Irvington-on Hudson, NY 10533;or Fax: (914) 591-8910. E-mail: freeman@westnet.com.

Back in print! Two ClassicTitlesfrom FEE LIBERALISM: The Classical Tradition By Ludwig von Mises -Robert Hessen SeniorResearchFellow,HooverInstitution flI heartily recommend Liberalism,not only as the best introduction to Mises' writings, but also as the finest exposition of classical liberalism-the philosophy of free men, free markets, and limited government." LIBERALISM: The Classical Tradition by Ludwig von Mises neatly sums up the ideas and principles of nineteenth-century classical liberalism as they apply to the twentieth century. First published in Germany in 1927, Liberalismwas published in the United States under the title The Free and ProsperousCommonwealthin 1962 and reissued in the mid-seventies by The Institute for Humane Studies. Republished by FEE in 1985; 2nd printing 1995. 230 pages $14.95 paperback FREE TRADE The Necessary Foundation for World Peace Edited by Joan Kennedy Taylor "Free Trade: The Necessary Foundation for World Peace is a much-needed contribution to the present debate. Protectionism and statism are the same animal. As the late, great authors includ ed in this volume, Frederic Bastiat, Ludwig von Mises, and Frank Chodorov, strongly insisted, free trade creates the spirit of peaceful growth while protectionism is the forerunner of military aggran dizement. Every reader will reap a wealth of valuable analysis from this book."

, -Leonard P. Liggio ExecutiveVice President,Atlas EconomicResearchFoundation H ere are fifteen short essays that discuss such thorny issues as world hunger, industrial superiority, industrial unemployment, the American Revolution, foreign investment, the fallacies of economic nationalism, and how free trade protects our national interests. In addition to Bastiat, Mises, and Chodorov, contributors include Clarence B. Carson, W. M. Curtiss, Bettina Bien Greaves, Henry Hazlitt, Samuel H. Husbands, Gary North, David Osterfeld, E. C. Pasour, Jr., and Hans Sennholz. 140 pages $9.95 paperback Please add $3 per order of $25 or less, $4 per order of $26-$50. Send your order with the accompanying check or money order to FEE, 30 South Broadway, Irvington-on-Hudson, NY 10533. Visa and MasterCard telephone and fax orders are welcomed: (800) 452-3518; fax (914) 591-8910.